Membrane microdomains enriched in cholesterol and sphingolipids modulate a number of signal transduction pathways and provide a residence for heterotrimeric G proteins, their receptors and effectors. We investigated whether signaling through Gs was dependent on these membrane domains, characterized by their resistance to detergents, by depleting cells of cholesterol and sphingolipids. For cholesterol depletion, rat salivary epithelial A5 cells were cultured under low cholesterol conditions, and then treated with the cholesterol chelator, methyl-b-cyclodextrin. For sphingolipid depletion, LY-B cells, a mutant CHO cell line unable to synthesize sphingolipids, were incubated under low sphingolipid conditions. Depletion of cholesterol or sphingolipid led to a loss or decrease, respectively, of Galpha s from the detergent-resistant membranes without any change in the cellular or membrane-bound amounts of Galpha s. The cAMP accumulation in response to a receptor agonist was intact and slightly increased in cells depleted of cholesterol or sphingolipids compared to control cells. These results indicate that localization of Galpha s to detergent-resistant membranes was not required for Gs signaling. Analysis of the role of lipid rafts on the kinetics of protein associations in the membrane suggests that compartmentation in lipid rafts may be more effective in inhibiting protein interactions and depending on the pathway, ultimately inhibit or promote signaling. Regulators of G-protein signaling (RGS) proteins downregulate signaling by heterotrimeric G-proteins by accelerating GTP hydrolysis on the Galpha subunits. Palmitoylation, the reversible addition of palmitate to cysteine residues, occurs on several RGS proteins and is critical for their activity. For RGS16, mutation of Cys-2 and Cys-12 blocked its incorporation of [3H]palmitate, significantly inhibited its GTPase activating protein (GAP) activity toward a Galpha subunit fused to the 5HT1A receptor, but did not reduce its plasma membrane localization based on cell fractionation studies and immunoperoxidase electron microscopy. Palmitoylation can target proteins, including many signaling proteins, to membrane microdomains, called lipid rafts, that can be isolated by their resistance to detergents and buoyancy on gradient centrifugation. Endogenous RGS16 in rat liver membranes and overexpressed RGS16 in COS cells, but not the nonpalmitoylated cysteine mutant of RGS16, localized to lipid rafts. However, disruption of lipid rafts by treatment with methyl-b-cyclodextrin did not change the GAP activity of RGS16. The lipid raft fractions were enriched in protein acyl transferase activity and RGS16 incorporated [3H]palmitate into a peptide fragment containing Cys-98 within the RGS box. These results suggest that amino-terminal palmitoylation promotes the lipid raft targeting of RGS16 that allows palmitoylation of a poorly accessible cysteine residue. The heterotrimeric G proteins, G12 and G13, are closely related in their sequences, signaling partners and cellular effects such as oncogenic transformation and cytoskeletal reorganization. Yet, G12 and G13 can act through different pathways, bind different proteins and show opposing actions on some effectors. We investigated the compartmentalization of G12 and G13 at the membrane because other G proteins reside in lipid rafts, membrane microdomains enriched in cholesterol and sphingolipids. Lipid rafts were isolated after cold, nonionic detergent extraction of cells and gradient centrifugation. Galpha 12 was in the lipid raft fractions, whereas Galpha 13 was not associated with lipid rafts. Mutation of C11 on Galpha 12, which prevents its palmitoylation, partially shifted Galpha 12 from the lipid rafts. Geldanamycin treatment, which specifically inhibits Hsp90, caused a partial loss of wild-type Galpha 12 and a complete loss of the C11 mutant from the lipid rafts and the appearance of a higher molecular weight form of Galpha 12 in the soluble fractions. These results indicate that acylation and Hsp90 interactions localized Galpha 12 to lipid rafts. Hsp90 may act as both a scaffold and chaperone to maintain a functional Galpha 12 only in discrete membrane domains and thereby explain some of the nonoverlapping functions of G12 and G13 and control of these potent cell regulators. Most heterotrimeric G-protein alpha subunits are posttranslationally modified by palmitoylation, a reversible process that is dynamically regulated. We analyzed the effects of Galpha s palmitoylation for its intracellular distribution and ability to couple to the beta-adrenergic receptor (BAR) and stimulate adenylyl cyclase. Subcellular fractionation and immunofluorescence microscopy of stably transfected cyc- cells, which lack endogenous Galpha s, showed that wild-type Galpha s was predominantly localized at the plasma membrane, but the mutant C3A-Galpha s, which does not incorporate [3H]palmitate, was mostly associated with intracellular membranes. In agreement with this mislocalization, C3A-Galpha s showed neither isoproterenol- or GTPgammaS-stimulated adenylyl cyclase activation nor GTPgammaS-sensitive high affinity agonist binding, all of which were present in the wild-type Galpha s expressing cells. Fusion of C3A-Galpha s with the BAR (BAR-(C3A)Galpha s), partially rescued its ability to induce high affinity agonist binding and to stimulate adenylyl cyclase activity after isoproterenol or GTPgammaS treatment. In comparison to results with the WT-Galpha s and BAR (BAR-Galpha s) fusion protein, the BAR-(C3A)Galpha s fusion protein was about half as efficient at coupling to the receptor and effector. Chemical depalmitoylation by hydroxylamine of membranes expressing BAR-Galpha s reduced the high affinity agonist binding and adenylyl cyclase activation to a similar degree as that observed in BAR-(C3A)Galpha s expressing membranes. Altogether, these findings indicate that palmitoylation ensured proper localization of Galpha s and facilitated bimolecular interactions of Galpha s with the BAR and adenylyl cyclase.